Mon, 22 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
Good morning. Well I think and -- on all the other sponsors for hosts in the conference. And with that let me get started. That the forward looking statement lets you guys read that. -- went up a little bit about the portfolio in an -- as a symbol. It's been a little bit over two and a half years now since we've purchased Kerr McGee and western gas resources. Combine the three companies together. In a resource constrained world and figured out that. We -- very Catholic official portfolio McCann came up the backside. So we -- an all cash deal for the two companies but -- -- four billion dollars worth. And then we proceeded over the next three to four months. -- all the opportunities sets of all the companies. And then decided that. The best fit going forward was to divested several men and -- monetize approximately sixteen billion dollars an after tax proceeds. In the time subsequent to that. And we feel as we design something as this very special in today's resource constrained world. We have a very deep inventory very carefully efficient nor did it in the more the attributes and justice that. This is what we're very very proud. When you look at. What we called the two lower boxes here. Where we have -- proved reserves of 2.4 billion barrels. And sitting on top of that and visualize a funnel and -- -- Four billion barrels of low wrist net captured resource it's. And these are predominately in three -- these are in the United States. Almost all of them are infill drilling are down -- opportunities. And we have access to T and large fields each of which has over at PC effort resource potential. And when you look at business -- as an IR guy gets -- excited because we have line of sight performance going forward for at least the next five years. Just from these two categories alone. We'll growth by the 9% annually -- going basis. And replace at least -- 120%. Of our production every year we reserve adds. -- and then sitting on top of that. Is really a lot of excitement around this story we have three billion barrels of -- unified expiration opportunities. And this is where things like our recently announced water discoveries it's a lot of are gonna expansion opportunities. As well as. Million acres that we have. Between the Marcellus haynesville. Maverick. Better and with this we've had a great track record. In the last four and a half years we spent about three billion dollars. Identified and discovered. Around a billion barrels. -- it's. We have already divested of four and a half billion dollars worth. We took some we take some of the -- dollars off the table early. And on top of that we -- we've already about a hundred million barrels of it that we're producing today. Those are in -- eastern gulf next few independents have properties. So very very valuable and -- plus on top of that we have 400 million barrels that we haven't looked yet. That there are dropping into the funnel -- this is gonna see your column and talk more about those in just a bit but with that three billion dollars initial investment. Before he created between twelve and fourteen billion dollars it. We're pretty balanced we're about. 85% located in the in the you asked that 15% internationally. And split pretty evenly amongst it Iraqis is a big component of our reserves and our current production. And we're split about 6040 split on gas -- liquids. And -- -- mention the low risk development opportunities. About three billion barrels or eighteen PCF preside in the United States -- regions. And this is where we do expect you know basically 10% production come from the next several -- production. And this is really what's gonna drive the aggregate corporate production for the next couple years before that big mega projects come on line. Things you were gonna be very happy about -- -- about when he 500 wells a year. And next five years we anticipate of converting to proved reserves over a billion barrels. And that's from -- known opportunities. Has nothing in their -- therefore from the developments that we're gonna have in the Marcellus haynesville maverick. -- -- And most -- underscored by what's in the rockets. This is pretty exciting Iraqis has just -- -- drilling machine that's more than manufacturing and where -- is minimal geologic minimal reservoir risk -- it's a matter of execution and economics. And we get a lot of questions related to the net that pricing and Iraqis. You know we did very early in the game back in -- -- 2006 early 2007. As we recognize that with the huge opportunity -- that we have there we have to guarantee the economics are so. We went out and all the three companies combined had about 600 million a day -- -- transportation out of reach. And on top of that for the next you know 089 and -- emulator and a lot of basis -- -- to go along with that. -- the end result is for 2009. I mean. We're basically 9500%. Protected. At a very attractive rate which is and we're gonna receive out there for all of our gas production nymex. Henry. Less a dollar and when he -- You can compare that to you know I think it averaged a little over 250 picture for the differential so very very attractive. And we feel we protect that are economics to guarantee the execution there. Also we've. Been very very focuses and since I -- is a manufacturing type environment out there now because these are only infill wells were drilling. We really focused on increasing our efficiency is out there and a way to do that is by reducing yours despite day. And we've had across the portfolio out there almost 10% reduction from 07. Days -- days on the days on all levels so very very efficient proponent and we're generating here. And we put to slide -- -- recalled are some of our hearts. And we use and they and -- price deck I don't know what the right one is that when you go through their look at this and by the way our market cap. It's been about seventeen billion dollars recently. And when you look at just the values are on actual portfolio with a -- proved. The low risk development opportunities of coverage in the NR -- The impact expiration can see that it's a very very very very valuable piece of business. In the Gulf of Mexico where I want -- that we are one of the premier. Operators out there. Where the second largest acreage holder 2.2 million net acres. And we now have eleven one -- just started last week last Tuesday it's. Chevron operated property -- 60000 barrels a day capacity in sixty million -- Gas. And we have -- -- 5% interest so that's the latest addition to look. Portfolio -- out there. And this infrastructure that we have just been extraordinarily valuable to us. Especially when you look at what we've what we've been able accomplish on the expiration side. We've had over 50% success rate in the deep water environment in the last four years. And it's been an uncommon success especially compared to -- -- group. And what that infrastructure does this Cesar -- gets -- side. Is that this is a two to 400 million barrel resource play and these are recoverable. And we actually you if you guys looked at our latest. Conference call on earnings release but we just announced another significant appraisal -- here. The Tonga west appraisal had over 700 feet -- -- a unit so it's it's pretty exciting. And and what this is done and have in the infrastructure and the expiration success rebuild a chronology -- haven't number wells drilled out there. Is we have this 2400 million -- discovery. -- is about a six mile long contiguous -- work here. But because we own constitution mainly on -- -- for sand. And when we think this is gonna come on -- -- in the early 2011 time period it should have 4050000. Barrels a day of excess capacity. And we're going to be able to do because it's definitely will seize upon -- deathly warrants its own stand alone facility. We're going to be able to take these -- steps he completions and -- inspect the constitution. I do and so we're gonna avoid almost a billion dollars of expenditures because we're not but that stand alone facility. On top of that we're going to be able to accelerate the -- on this by apple two years. On a multi billion dollar project so. Incredible value creation opportunities. And one thing. We known people -- -- of the houses -- fair fair and a fifty or sixty dollar price and because these advantages and access to infrastructure. -- -- just in and of itself is what generate at least 10% return down the down into the twenty dollars -- and environment. So again some of the parts. You see the inherent value just have our Gulf of Mexico position I think this is that he under appreciated -- -- For -- I think it's hard for people to value the expiration aspects. And then moving into the international arena. We stand. By first part of this last for five years gone through and assembling positions in several areas. In 2008. Usually the first year that we're we're going to be significantly active -- that on the drilling side mental outlook continue forward and -- nine and beyond. Spread across the globe. Predominant deep water environments with the -- production in Alaska Algeria and China. And the other areas are emerging. Core areas and we really did that might take in the skill sets that we developed in the deep water Gulf of Mexico. And we're transferring those and another deep water garments around. And this is -- epitomized by my Ghana. This is this -- really made back in 2007. We drilled four wells out there all of them -- successful. It's -- A -- strata graphic play it's not a structured play. And this thing is gonna be. Awesome contribution for us. We've forties -- -- that that -- resource range for jubilee and you glean is the big green blob right you know the man. Is between 501. Point eight billion barrels we'll have a little over a quarter of that. And were already out there are going right now -- schedule a number two appraisal. So we've already defined the 500 million barrels represents that. Northeast to southwest lying there with a little bit of -- -- around it. They -- -- -- -- mahogany three to two next appraisal wells we'll determine that aerial extent of it to hopefully boost resource for entire. And we're not done yet. Because in addition to this member that that green blob it's about 90000 Acre on that 700000 -- blocks that we have. We have another five to eight additional expiration opportunities. A couple which could be as big as jubilee itself so this is going to be -- very exciting area for years to come. We're gonna have for deep water -- -- your work and in peace. One of his joint house and mentioned and we'll have another -- come and right around Thanksgiving time to -- the next appraisal well. We do expect to have this -- mention this was a 2007 discovery. We're gonna we anticipate having the first phase of this 120000 barrel a day -- this online. At the end of 2000 and can't. So this is absolutely incredible for a deep water discovery and and an international environment. No we have Brazil this was our most recent success. We announced our -- discovery which is in the pre salt. On block thirty in the Campos basin. It's it's about 25 miles. South east of two -- thing. Which was Petra crosses they discover that they announced an early part of September we're. There's actually -- pitcher in the Financial Times with president -- out there with his hands covered with oil that was come from your partner. The well the one -- currently producing on an extended -- test is -- 181000 barrels a day. And with the -- who will we had 200 feet of net pay in an upper zone and a -- result in that we can't quite determine what we have yet we'll come back and -- some jewels and tests on -- first part of next year. But we're very excited about this. We did take the deep water millennium one -- -- contracted rigs that we had brought it down here to execute it. It's pretty deep very high pressures once again below its all CD need -- more powerful -- capabilities -- That. After B that after we -- enjoying the moment the law who will. We took the ring back up to the history of the -- to us and we and we are just now reentering serpent. That's a well that we started in 2007. As a pitcher brought mr. -- operated well. And their original rig that was on there couldn't handle the mud lake home once we got in -- -- so we're gonna -- and -- enough there. Should be -- by again by Thanksgiving so again a lot of news -- come from here. And we'll be drill another five or six expiration prospects in the pre sold throughout here during the course of 2009 so. Give a lot of these -- coming from there coming. And again this is some of the parts for international again very very powerful we got we feel. That in a lot of these emerging areas we got great. Acreage positions in each -- -- and look forward to. Some great results in the near term. This is a -- that I actually I mentioned it when we start off talking. About the portfolio and here's the -- or expiration you can see that -- and very successful deep water environments. We are not afraid to takes -- -- off the table monetize some of these early. And again this is just we we plan on -- over 200 million barrels a year from our expiration. Program going forward and in -- -- resources. And here's what to expect for promise and 2000 innate. We do expect to produce a little over 205 million barrels for the year. Expect this fell about five billion dollars on capex. About four and a half four point six billion dollars and Ian. 250 million -- in new reserves. And we really focused on our liquidity position. We ended the quarter was a little over two -- right at two billion dollars of cash on hand. We -- had already completed our 600 million dollar share repurchase. We'd also retired almost 500 million dollars of our floating rate notes that are due in 2009. And we still expect to close paired Reno which is a shallow water project that we had better Brazil -- that'll know to have it closed. By the end of the year be well over billion dollars and net proceeds come from itself. We we think were in in great shape to accomplish whatever we need to do next year. And I think that's probably all we need to go over. So I think you guys appreciate the time.